Acquiring land for projects - an update from Uganda

A recent case in the courts in Uganda concerning the way in which the government uses its powers of compulsory acquisition of private land for public purposes has confirmed that the Government must pay compensation before land is expropriated.

The case raises issues for investors in projects where the government provides the land. It also provides guidance for would-be investors in Uganda making a risk assessment of whether and how the Government might take expropriatory action.

The Supreme Court of Uganda’s decision in Uganda National Roads Authority V Irumba Asumani & Anor , 2015 finally aligns the Land Acquisition Act of 1965 (Land Acquisition Act) with the Constitution of Uganda (Constitution). In so doing, it reminded investors of the importance of assessing whether the government has followed proper procedures for the acquisition of land being provided for an intended project.

Prior to this landmark decision, the government had on various occasions used the authority accorded to it under the Land Acquisition Act to publish declarations in respect of any land it sought for public use. It then immediately took possession after giving the declaration but prior to the payment of compensation to the land owner. This resulted in many aggrieved land owners going uncompensated for years after their land had been taken.

The case concerned the government’s commissioning of a project to upgrade the Hoima - Kaiso- Tonya road in Hoima District, in order to facilitate oil exploration and exploitation activities in the area. The process of upgrading necessitated acquiring more land which the government proceeded to do by way of compulsory acquisition in advance of agreeing to pay compensation.

While the Supreme Court did not seek to fetter the right of the Government to compulsorily acquire land in the public interest, it was held that the right as enshrined under the Land Acquisition Act had to be read and modified by the Constitution which provides for protection from deprivation of property. The court held unanimously that the relevant provision in the Land Acquisition Act is nullified to the extent that it does not provide for “prior payment of compensation before government compulsorily acquires or takes possession of any person’s property”.

This decision has special significance in the wake of Uganda’s recently enacted Public Private Partnerships Act 2015 and the projects which the Government is in the process of concluding with private investors, such as the Kampala- Jinja expressway. Such projects require substantial land acquisitions by the Government and although the provision of land will often be the responsibility of Government, investors will be concerned that nothing untoward has occurred in the acquisition process which could delay the project or raise bankability concerns for financiers. Although the obligation to compensate land owners will usually lie with the Government this recent case highlights the importance of project developers and financiers carrying out their own due diligence of the acquisition process which has been followed.

About

Africa is as dynamic a market as it is diverse. We understand that changes impacting your business can arise rapidly and vary significantly across the continent.

Our understanding of Africa’s markets stems from extensive experience on the ground. Through our Inside Africa blog, we aim to apply this insight to provide you with timely commentary on the latest developments across Africa, as well as insight into the many nations that make up this vast continent.